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Portfolio > Alternative Investments > Hedge Funds

Hedge Funds Keep Going in Blackout

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NEW YORK (–Some managers affected by last week’s massive power failure were able to continue trading at a back-up office operated by Richard Fleischman & Associates Inc., a New York-based technology firm with around 200 hedge fund clients in the city.

“They were able to come in, check their portfolio and monitor the market on Friday,” said Michael Curry of RFA. “Luckily, activity was pretty light for most people, but even if it had been heavy, these people were ready.” Most of the users are long/short equity funds.

One of RFA’s facilities based in Purchase, N.Y., replicates typical hedge fund operations, including trading. It offers pre-configured workstations that can receive market data feeds from Bloomberg and Reuters. The firm shunts client e-mail to these computers, as well, and provides phone, fax and copier services. The operation has power back-ups and a diesel generator.

Most managers use the servers to back up data, planning to use this data from their homes or some other location, but that was mostly not feasible in the wide-reaching blackout. By contrast, a group of about 15 funds keep office space in the facility, as well as data, and were able to work from there, said Mr. Curry.

“Some are now re-thinking their plans and considering having at least some hot site seating as part of their business continuity strategy,” he added.


As power was restored, RFA monitoring systems started up client networks on a case-by-case basis. They were all up and running when trading opened on Monday, according to the firm. While automated systems take care of many shifts and keep the flow orderly, experts recommend training beforehand to respond to potential disasters.

“We at RFA advise any firm reliant on daily changes in the market to consider hot site seating and for those already participating in hot site service, it’s important to run periodic drills to ensure your disaster preparedness is high,” said RFA President Richard Fleischman, in a statement.

“Although a blackout like this is a once-in-a-lifetime event, any seemingly minor short-term power outage or network interference can mean a loss of time doing business, equating to huge losses in client response time and revenues. Preparing for such an instance needs to rank as an utmost priority.”

The Purchase facility has been operating since April 2002. It accommodates back-office personnel and some traders use it on a regular basis Previous HedgeWorld Story.

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